NYC Bankruptcy

What is a New York Chapter 7 Bankruptcy?

Filing for bankruptcy gives a fresh start to financially strapped individuals. In a Chapter 7 personal bankruptcy, all credit card debts and “unsecured” debts are eliminated and it gives you a chance at a new life.

After bankruptcy, you can recover good credit in about two years. Filing for bankruptcy does not mean 7 to 10 years of bad credit – that is a myth. Credit card companies usually offer you new credit cards right after the bankruptcy is over. Qualifying for a mortgage will take about three years after bankruptcy.

The most often asked question is how does one qualify for Chapter 7 bankruptcy? Essentially, you need to have three things: (1) moderate to low income, (2) significant amount of debt and (3) no substantial property.

One: Moderate to Low Income

In order to qualify for Chapter 7 personal bankruptcy, you must have moderate to low income. Your income level is determined by your household’s circumstances. This includes factors such as your cost of living, where you live and what deductions are taken out of your paychecks.

Every case has its specific circumstances. Here are a few examples where Chapter 7 bankruptcy laws can help:

• A single parent with one child and no child support, living in the Bronx can be earning $58,000 a year and qualify for Chapter 7 bankruptcy.
• A married couple living in New Jersey with two small children where one spouse earns $60,000 a year and the other spouse earns$45,000 a year could potentially qualify for Chapter 7 bankruptcy with a total household income of $105,000.
• A single individual living in Brooklyn with no dependents can earn $45,000 a year and qualify for Chapter 7 bankruptcy.

Income levels that qualify for Chapter 7 bankruptcy filing are based on median income figures provided by the Census Bureau. However, these figures are not strict guidelines so you may be able to qualify for Chapter 7 bankruptcy even if you are making more income than the median income depending on the details of your situation. If your income is too high to qualify for Chapter 7 bankruptcy, you may qualify for Chapter 13 bankruptcy.

Two: Significant Debt

Individuals can file Chapter 7 bankruptcy to eliminate debt as low as $4000 and as high as $100,000 or more. In an average Chapter 7 case, debt totals typically range between $20,000 and $60,000. The total amount of debt that is considered substantial can vary greatly from one individual to another. For example, a $4,000 credit card debt to a single parent with two children, earning $28,000 a year with no child support can be just as overwhelming as a $20,000 credit card debt for an individual with higher income.

Three: No Substantial Property

Filing Chapter 7 bankruptcy does not mean you lose all of your property or possessions. The bankruptcy law is designed to protect individuals’ cars, homes, bank accounts and other assets up to certain values. In the great majority of bankruptcy cases, consumers are allowed to keep their cars, homes, bank accounts and other household items. The amount of protection is different for each state. If your assets are above the value allowed, the Bankruptcy Court could potentially sell them to pay your creditors.

Depending on which state you live in, you may be entitled to select between State exemptions and Federal exemptions which are different laws that protect different assets in different ways. The safest way to ensure that all of your assets are protected is to consult with a lawyer for bankruptcy evaluation.

If you are interested in learning more from an attorney in bankruptcy practice, call us today at 212-315-3755 for a free consultation. We are conveniently located on the corner of 34th Street and 5th Avenue in Midtown Manhattan and our offices are open Monday through Saturday.

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About Us

Since 1984, Mr. Juntikka has been limited to personal bankruptcy law and class actions related to consumer credit transactions. In 2010, Charles Juntikka & Associates ranked 31st in the nation for the number of bankruptcies filed.

For the past twenty years, Charles Juntikka & Associates has filed the most personal bankruptcies annually in New York City – over 20,000.